In February 2017, Guernsey’s Government approved the establishment of a register of beneficial ownership information.
In implementing this initiative, Guernsey, along with a large number of other jurisdictions, is maintaining its commitment to meet international standards on tax transparency and is adopting the recommendations of the Financial Action Task Force.
This new Register will not impact greatly on the fiduciary sector in Guernsey, as corporate service providers are already required to obtain relevant information on beneficial ownership under anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations.
In Guernsey, unlike many other jurisdictions, the use of a regulated corporate service provider to undertake company formations is already obligatory.
Restricted Access to the Register
Certain jurisdictions, including the UK, consider that a publicly available register should be adopted. However, Guernsey’s approach is that open accessibility would not allow the Government to guarantee the security of information held and would not be compliant with data protection legislation.
Consequently, access to the register in Guernsey will be restricted to “designated persons” in Guernsey. Legal gateways are being established to allow the sharing of beneficial ownership information with specific Guernsey entities, such as the Guernsey tax authorities and other foreign authorities for designated purposes.
Guernsey Registered Agents
Under the Companies Law and the Limited Liability Partnerships Law, Guernsey companies and Limited Liability Partnerships must appoint a Resident Agent. This is a corporate service provider licensed by the Guernsey Financial Services Commission (GFSC) or a locally resident official. For a company, a locally resident official will be a director and for a limited liability partnership it will be a member. A record of the Resident Agent must be provided to the Registrar.
For companies where the Resident Agent is a company official, additional information may need to be gathered.
Definition of “Legal Persons”
The Register will include beneficial ownership information in relation to all types of legal persons established in Guernsey. This will include:
- Companies incorporated under the Companies (Guernsey) Law, 2008
- Foundations created under the Foundations (Guernsey) Law, 2012
- Limited Partnerships with legal personality formed under the Limited Partnerships (Guernsey) Law, 1995
- Limited Liability Partnerships established under the Limited Liability Partnerships (Guernsey) Law, 2013.
Administration of the Register
The Registrar of Companies has been appointed to administer the new register.
The Role of Resident Agents and Power of the Registrar
Obligations of Guernsey Resident Agents will be enhanced and extended to include the provision of additional information regarding beneficial owners, such as former names of individuals, a service address if this is different to an individual’s residential address, and the date on which beneficial ownership commenced (if after the date the legislation comes into force).
If no beneficial owner has been identified, a statement must be provided to this effect.
Resident Agents will also be required to verify the information provided (although this is already an obligation under AML/CFT regulation). They will be required to provide this information to the Registrar, together with a statement confirming that the information has been verified, and they will be required to notify the Registrar of any changes to the information maintained on the Register.
The Registrar will be given powers to issue compliance notices and warnings, impose administrative financial penalties and disqualify persons from acting as Resident Agents.
Definition of a “Beneficial Owner”
For the purposes of the Register, a beneficial owner will be defined as an individual (i.e. a natural person).
In the case of a company, this will apply to individuals who hold, either directly or indirectly through a chain of ownership, more than a specified percentage of the shares or voting rights in a company, or the right to appoint or remove the majority of its directors, as well as individuals who might otherwise control the company.
Currently the percentage threshold is 10%. It will be interesting to see whether the same, or even tighter parameters, will be introduced under the new regulations.
Where shares are held jointly or individually by a number of associated persons, e.g. by members of the same family, or persons who have entered into an arrangement to exercise their rights jointly, each person will be treated as holding the combined shares or the rights to them all.
It is expected that specific requirements will be introduced in respect of nominee arrangements. At minimum, where there is a nominee relationship, details relating to the legal owner and the beneficial owner must be notified to the Registrar and there must be a statement as to why the nominee relationship has been established.
Guernsey as a jurisdiction has always taken its compliance and reporting obligations very seriously. This is reflected in the approach to the new Register of Beneficial Owners.
An interesting feature of the new Register is that it will not be open to the public and will only be accessible by “designated persons”.
For additional information regarding the Guernsey Register of Beneficial Owners please speak to Bruce Watterson or John Nelson at the Dixcart office in Guernsey: firstname.lastname@example.org, or to your regular Dixcart contact.